Sims Group forms joint venture with Adams Steel
Sims Group Limited has entered into an agreement to merge its Southern Californian Metal Recycling assets with those of Adams Steel LLC to create a new entity, SA Recycling LLC.
SA Recycling, which will be owned 50% by Simsmetal West LLC and 50% by Adams Steel, will operate within a territory of Southern California, Arizona, Southern Nevada and Northern Mexico.
The venture will combine Sims’ deep water facility at the Port of Los Angeles with Adams Steel’s two inland shredding operations and extensive network of inland feeder yards. The new business will be run by George Adams, current president of Adams Steel, who will report to a board comprising of eight directors, four nominated by Sims and four by Adams Steel. A nominee of Sims will be chairman of the new company and Sims will also nominate its chief financial officer.
The combined business will handle in excess of 2 million tons of ferrous scrap and nearly 100,000 tons of non ferrous scrap (including non ferrous shredder residue) and have revenues in excess of US$600 million.
Other than an equalization of capital expenditure since January 1, 2007, no cash will be exchanged as part of the transaction. Sims’ investment in SA Recycling will be equity accounted. The majority of ferrous material arising from the new entity will be sold to Sims Group Global Trade Corporation under a third party sales agreement. SA Recycling anticipates having its own stand-alone banking facilities to finance working capital and growth.